#298 What Has Happened to Merger Control in India? The Impact of the September 2024 Changes
Nov 4, 2024
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Nisha Kaur Uberoi, a partner and competition law chair at JSA law firm, shares her expertise on recent changes to India's merger control regime. She discusses the new deal value threshold and the shift to a material influence test for control, reshaping how mergers are assessed. The conversation highlights the implications for transactions and the challenges that lie ahead, including the revised green channel for approvals and added mapping requirements for affiliations. Nisha's insights provide a crucial understanding of how these developments will affect businesses operating in India.
The introduction of a new deal value threshold in India will significantly expand the number of merger notifications requiring regulatory review.
The shift from 'decisive influence' to 'material influence' in assessing control represents a major change in merger scrutiny and compliance expectations.
Deep dives
Transformative Changes to Indian Merger Control Law
Significant amendments to the Competition Act of 2002 have transformed India's merger control regime, with changes implemented on September 10, 2024, being described as the most extensive overhaul to date. One of the most notable revisions is the introduction of a deal value threshold (DVT), which will now capture more transactions that previously went unreported. This threshold is set at INR 2,000 crores (approximately USD 239 million) and is applicable to both traditional and digital transactions, reflecting India's evolving economic landscape. Additionally, the amendments establish a new standard of control that deviates from the previous 'decisive influence' to a 'material influence' approach, allowing broader scrutiny of mergers and acquisitions.
Increased Regulatory Scrutiny and Filings
With the new law, the number of mandatory merger notifications is expected to rise significantly due to the updated definitions and thresholds. The revised definition of control will affect numerous private equity and minority acquisitions, as more transactions will now fall under the purview of regulatory review. This is exemplified by the shift towards assessing material influence rather than solely focusing on decisive control, which may lead to mixed outcomes for companies navigating the new landscape. The adjustments are particularly relevant to sectors that previously operated with exemptions under the old regime, such as pharmaceuticals and digital services.
Enhancements to Review Timelines and Procedures
The amendments also include significant changes to the timelines for merger reviews, with the aim of improving efficiency in processing notifications. The initial review period for mergers has been shortened from 30 working days to 30 calendar days, though there are some exclusions. Additionally, phase two reviews are now limited to 150 calendar days instead of the previous 210 days. These operational enhancements are coupled with the CCI's newfound ability to propose remedies during the initial phase, rather than waiting for parties to voluntarily offer solutions, which streamlines the review process for both regulators and businesses.
New Rules and Challenges for Affiliates and Notifications
The changes to the definition of affiliates will have considerable implications for transaction notifications, now requiring a more comprehensive approach to assessing overlaps. Notably, the earlier exemption thresholds for smaller targets have been negated when the DVT applies, meaning many transactions previously considered exempt will now need to be reviewed. Moreover, the amendments emphasize the need for companies to document and assess their commercial relationships thoroughly, particularly in light of non-control access to information. Practitioners must remain vigilant regarding these changes, as their failure to comply with the new requirements could lead to unanticipated regulatory challenges.
Significant changes to the Indian merger control regime came into effect in September 2024. But what has happened? Nisha Kaur Uberoi, partner at JSA law firm in Mumbai, joins Puja Patel and Matthew Hall to discuss the changes and their likely practical impact on transactions affecting India. Listen to this episode to learn more about the changes including the new deal value threshold, the codification of the material influence test for control, new timelines and procedure and the impact of new definitions on the use of the Green Channel route for approval.
